CityCash created India's first Micro-Payments Ecosystem

CityCash, a fintech company focused on creating India's first transit led micro-payments ecosystem, announced the closure of its seed round of $1Mn from Orios Venture Partners, India’s leading early-stage venture capital fund. Earlier, CityCash has raised funds from FinoPaytech, the promoter of Fino Payments Bank and a leading fintech company that works towards enabling financial inclusion. Transit and Micro retail transactions have been unviable for large networks like VISA , Master despite decades of presence as these use cases require offline payments while transactions on Network and UPI rails are all online. High costs of online transactions are also passed on to merchants as MDR, which is again a major source of friction for mass adoption. Even a floor of Rs 1 for micro transaction is a bit too much.

CityCash was founded by Vineet Toshniwal, an alumnus of FMS Delhi and with past experience at Citi Bank, Bank of America, Infosys and Equirus Capital. The company offers a multi-purpose NFC-based smart-card that can be used to transact in an offline mode in transit and retail, rendering an extremely smooth tap-n-pay experience for consumers. They are creating an offline tap-and-pay based payments ecosystem for 200 Mn+ low and middle income consumers who use public transit and make small retail transactions. CityCash works closely with the card issuer banks, bus corporation partners and payment networks in order to establish the micropayment ecosystem. The infusion of new funds will be used for expanding market access, merchant ecosystem and development of technology to deploy Open loop National Common Mobility Cards on SoftPOS and digital ticketing solutions.

The company has a unique consumer acquisition model that leverages long-term partnerships with bus corporations, allowing CityCash to rapidly acquire a very large consumer base at near zero cost of acquisition. Partnering with MSRTC, the state bus corporation of Maharashtra, CityCash has issued 3 million cards to consumers in 9 months since it went live and is accepted in 20,000 buses, each a unique point of sale. MSRTC has a daily bus ridership of 7 Mn and an annual bus ticketing turnover of USD 1 Bn. Transit payments necessarily require a Phygital model where the consumers have to be serviced through an agent network. FINO and CityCash have together activated a large network of 4000 agents in Maharashtra.

Commenting on the fund-raise, Vineet Toshniwal, Founder, CityCash said, “Current ticketing model is high touch and requires exchange of paper tickets, coins and currencies. The need of the hour for the Bus corporations is to provide cashless, contactless and Covid-safe travel experience to the consumers by adapting technology at a rapid pace. RBI’s recent announcement of Offline Payments in Retail will be a game changer. Transit can play a pivotal role as it can drive very fast consumer acquisition and habit change from Cash to Tap and Pay. ”

“CityCash is an ideal partner for Fino. While our parent company is an investor, for us the association helps target 70 million consumers who use public transit for their daily commute and pay via cash. There is a great opportunity to digitise 15 billion transit transactions worth USD 7 billion to meet GOI-MEITY targets and further financial inclusion” added Rishi Gupta, MD and CEO, Fino Payments Bank, a subsidiary of FinoPaytech.

Commenting on the fundraise, Anup Jain, Managing Partner at Orios Venture Partners said, “India’s micropayments number over 1 Trillion transactions in volume and $500 bn in value take place purely in cash as none of the existing players have built a win-win model for consumers-merchants alike. These small payments cannot be carried out online with dependency on network availability and high charges to merchants. UPI and card POS machines only operate in online mode, which is not suited for micropayments. These micro SMEs and consumers are also denied formal working capital or loans due to absence of data. CityCash is uniquely positioned to create a transit-led, offline tap-n-pay ecosystem on the lines of globally successful models of HK octopus and London Oyster. The founders bring deep understanding of micropayments market and NFC based technology on their card platform”

In the public bus transit domain, India has an annual total payments value of about USD 7.5 Bn, split across approximately 15 Bn tickets. In addition, there is a micro-retail economy around transit hubs of another approximately USD 15 Bn where public bus users consume food & beverages and even take a last-mile shared auto rickshaw rides to their homes and places of business or work.